Correlation Between Federal Home and Hoist Finance

Can any of the company-specific risk be diversified away by investing in both Federal Home and Hoist Finance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federal Home and Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federal Home Loan and Hoist Finance AB, you can compare the effects of market volatilities on Federal Home and Hoist Finance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federal Home with a short position of Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Hoist Finance.

Diversification Opportunities for Federal Home and Hoist Finance

0.71

Correlation Coefficient

Federal Home  Hoist Finance

Poor diversification

The 3 months correlation between Federal and Hoist is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB and Federal Home is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federal Home Loan are associated (or correlated) with Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of Federal Home i.e., Federal Home and Hoist Finance go up and down completely randomly.

Pair Corralation between Federal Home and Hoist Finance

Assuming the 90 days horizon Federal Home Loan is expected to generate 1.13 times more return on investment than Hoist Finance. However, Federal Home is 1.13 times more volatile than Hoist Finance AB. It trades about 0.12 of its potential returns per unit of risk. Hoist Finance AB is currently generating about 0.08 per unit of risk. If you would invest  472.00  in Federal Home Loan on April 4, 2025 and sell it today you would earn a total of  218.00  from holding Federal Home Loan or generate 46.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Federal Home Loan  vs.  Hoist Finance AB

Federal Home Loan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Federal Home reported solid returns over the last few months and may actually be approaching a breakup point.

Hoist Finance AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hoist Finance AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hoist Finance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Home and Hoist Finance

The main advantage of trading using opposite Federal Home and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, Hoist Finance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hoist Finance will offset losses from the drop in Hoist Finance's long position.

The idea behind Federal Home Loan and Hoist Finance AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.